Key Points
- The US Federal Reserve has decided to maintain the benchmark interest rates, despite criticism from analysts.
- Despite a market downturn, Bitcoin ETFs show inflows and Bitcoin remains strong.
The US Federal Reserve announced on 12th June that the benchmark interest rates will remain unchanged, meeting expectations and aligning with 0.6% projections probability from the CME FedWatch Tool.
The decision came after a two-day Federal Open Market Committee (FOMC) meeting, where members decided to maintain the rates at 5.25% – 5.50% for the seventh consecutive time.
Criticisms and Reactions
This decision was also in line with Wall Street predictions but drew criticism from Anthony Pompliano who said, “It is arrogant for the central bank to believe that they can set an interest rate… the market is the true setter of interest rates.”
Following the announcement, the crypto market saw a significant downturn. As of 13th June, Bitcoin [BTC] dropped by 2.35% over the past 24 hours, while Ethereum declined by 3.66%.
Rate Cut Forecasts
The FOMC members have revised their individual projections for the number of rate cuts expected this year. Initially, in March, the FOMC projected three rate cuts by the end of 2024. Now, they have reduced this expectation to just one rate cut.
This revised forecast means that the FOMC now anticipates only one 0.25 percentage point rate cut before the end of the year. This announcement surprised some analysts who expected more aggressive rate cuts.
Despite Bitcoin’s recent bearish momentum, not all metrics point to a negative outlook. According to analysis of Santiment data, there has been a notable spike in Social Dominance metrics.
Additionally, the Relative Strength Index (RSI) has not indicated clear signs of either buying or selling pressure. Furthermore, Bitcoin’s spot Exchange Traded Funds (ETFs) experienced inflows of $100.8 million, marking a turnaround after two consecutive days of outflows.
Pompliano best put it when he said, “Bitcoin is the only asset that I’m aware of that is an asset class to itself which has outperformed inflation.”
